Thanks;Robert E. Moritz
US Chairman and Senior Partner at PricewaterhouseCoopers
Here we are, again. Huge portions of the government shut down on Tuesday over a partisan budget fight, forcing approximately 800,000 federal employees onto unpaid leave. And that is the tip of the iceberg: Washington also faces yet another debt ceiling deadline, a recurring trigger for brinksmanship and partisan strife during the past several years. Treasury Secretary Jack Lew has issued a dire warning, telling Congress that with only $30 billion of cash on hand by October 17, the United States will be on the verge of an unprecedented—and once unimaginable—default, unless the debt ceiling is raised.
I speak regularly with CEOs and business owners who say their frustration is now at an all-time high. In fact, nearly 90 percent of U.S. CEOs who responded to PwC’s most recent annual survey said volatile or uncertain economic growth is one of their top concerns, and more than two-thirds said they were extremely concerned by the government’s response to the fiscal deficit and the debt burden. Faced with uncertainty over economic policy from one quarter to the next, executives are hesitant to plan for hiring, growth or market expansion.
This country’s business leaders know better than anyone that kicking the can down the road is reckless, and it’s creating another element of uncertainty for them. I’m often asked how the country’s CEOs are responding to economic trends and market conditions. With much of the government now closed and a critical debt ceiling deadline looming, I am now being asked how CEOs are feeling. The first word that comes to mind is “numb.”
The double threat of a shutdown and a default is an opportunity—a fresh incentive for our political leaders to get serious about true reform by putting the nation’s interest ahead of partisan jousting. This nation’s leaders know this, yet we are somehow once again watching a re-run of this same bad show. More than 1,000 days have passed since the bipartisan National Commission on Fiscal Responsibility warned that Congress and the Administration must put America on sound financial footing by reforming the tax code and cutting spending. Despite a recent New York Times poll finding that an overwhelming 87 percent of Americans felt frustrated by the prospect of a government shutdown, Democrats and Republicans nevertheless remain deeply polarized and far from agreement. Our political leaders must—at long last—agree on and enact legislation that reduces uncertainty created by our unsustainable national debt. That legislation is a prerequisite for sustained economic growth. In their previous attempts to address the national debt, Congress and the Administration have devised only a series of disappointing short-term tactical solutions, where longer-term solutions are required. The CEOs with whom I meet regularly tell me their organizations are seriously impacted by the uncertainty that accompanies these band-aid fixes. As a result, the nation is stuck in a “low-growth recovery.” The economy expanded by just 1.1 percent during the first quarter of this year, according to revised numbers, and 2.5 percent during the second quarter. Since the economic collapse of 2008, unemployment remains unacceptably high—at 7.3 percent as of August.
Although many business leaders are numb, they understand they have another role to play due to the gridlock in Washington. Government can’t do it alone. At PwC, for example, we are particularly concerned with the precipitous drop in education resources. Faced with shrinking government resources devoted to education, PwC launched Earn Your Future, a $160 million investment in financial education that will impact more than 2.5 million students over five years. Other companies have done the same, recognizing that if the government lacks the resources to teach our children essential skills, the private sector must act, or we will all suffer the consequences.
At Campaign to Fix the Debt—an organization bringing together business leaders, current and former policymakers, economists and voters—we believe the time has come for our political leaders to agree on a strategic bipartisan response. We understand that these are tough decisions, and that the solution will require significant compromises. As business leaders, we manage this balancing act day in and day out: We weigh how to take care of our people, how to stay relevant in a competitive landscape, and how to create efficiencies and generate revenue. This isn’t easy work, and often it’s incredibly difficult and fraught with conflict. But as business leaders, we know it’s essential. Similarly, politicians need to step up and prioritize long-term sustainability over short-term gain.
The country has grown weary of watching Washington’s brinksmanship act, and the economic consequences of this repeat performance are too high. It’s time to change the script.